Private insurance bought with Medicaid funds has side benefit

Despite the controversy and concerns over the expansion of Medicaid coverage and option to use Medicaid funds to purchase private insurance through the Affordable Care Act's health insurance exchanges, researchers say there is an upside to the proposal: less "churning" in and out of Medicaid.

In Thursday's New England Journal of Medicine, researchers Sara Rosenbaum, J.D., and Benjamin D. Sommers, M.D., Ph.D., wrote that "buying exchange plans with Medicaid funds might shield families from the effect of small income shifts, since they could keep their plans and providers regardless of whether Medicaid or federal premium subsidies were paying the bill at any given moment."

The research team estimates "purchasing coverage in an exchange could reduce churning by nearly two thirds in states such as Arkansas that currently have highly restrictive Medicaid coverage for adults."

However, they said, in states such as Ohio, which has higher income limits under traditional Medicaid programs, the policy could create churning between the traditional Medicaid-eligible group and the expansion group (which will now be buying exchange plans).

"Although that effect would reduce potential gains in coverage stability, there would still be less churning than there would under a Medicaid expansion that doesn't use premium assistance," they wrote.